4 Salary Basis Employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in quantity or quality of work. Exempt employees must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked, with a few defined exceptions. Exempt employees do not need to be paid for any workweek in which they perform no work. Exempt employees may be required to be present during hours of operation.

5 Salary Basis Permissible Deductions in Pay (for exempt employees) Absences from work for one or more full days for personal reasons other than sickness or disability; Absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness;. Penalties imposed in good faith for infractions of safety rules of major significance; Unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions;

6 Salary Basis Permissible Deductions in Pay (cont d.) Weeks of unpaid leave under FMLA; Initial and terminal weeks (partial weeks) of employment. Exception: Public agencies having laws prohibiting pay for work not performed (MO has this) can deduct and not lose their exemption if: Permission was not sought or was sought and denied; Accrued leave has been exhausted, or Employee chooses to use leave without pay. UM Policy HR-202 states For exempt employees,absences may result in pay reductions in one-half day increments if paid leave is exhausted.

7 Exemptions or Exceptions There are exemptions and exceptions from the minimum wage and/or overtime standards of the FLSA for: Executive Employees Administrative Employees* Other Positions (Learned or Creative) Professional Employees Outside Sales Employees Computer Employees Highly Paid Employees *This is the category of exemptions that cause the most trouble for employers.

8 Exemptions: Executive Executive Exemption Salary basis test Salary level test Minimum $455 per week ($23,660 annually) Not pro-rated for part-time employees Duties test (highlights) Primary duty must include: Manage the enterprise or customarily recognized department; Regularly and customarily direct the work of two or more fulltime (40 hours, not.75 FTE, or benefit eligible) employees; Authority to hire/fire, and recommendations to hire, fire, promote, or other change of status are given significant weight.

9 Exemptions: Administrative Administrative Exemption Salary basis test Salary level test Not pro-rated for part time employees Minimum $455 per week ($23,660 annually) Duties test (highlights) Primary duty includes performing work directly related to the management or general business operations of the employer (not department); Duties require discretion and independent judgment with respect to matters of significance.

10 Exemptions: Administrative Discretion and Independent Judgment includes: Authority to formulate, affect, interpret, implement management policies or operating practices; Work affects business operations to a substantial degree; Authority to commit employer in matters that have significant financial impact; Authority to waive or deviate from established policies and procedures without prior approval; Authority to negotiate and bind the company on significant matters; Is involved in planning long- and short-term business objectives; and more

11 Exemptions: Administrative Discretion and Independent Judgment does not include: Applying well-established techniques, procedures or standards described in manuals or other sources; Recording or tabulating data; Clerical or secretarial work; Mechanical, repetitive, recurrent or routine work.

12 Exemptions: Other Positions An employee who leads a team of other employees assigned to major projects; Executive assistant to a business owner or senior executive of a large business who has been delegated authority regarding matters of significance; Management consultants who study the operations of a business and propose changes in organization.

13 Exemptions: Professional (Learned or Creative) Professional Exemption Salary basis test Salary level test Not pro-rated for part time employees Minimum $455 per week ($23,660 annually) Duties test (highlights) Primary duty includes performing work requiring advanced knowledge in a field of science (law, medicine) that is customarily a prerequisite across a field of work Predominantly intellectual work that includes consistent exercise of discretion and judgment. Customarily acquired by prolonged course of specialized intellectual instruction.

14 Exemptions: Highly Compensated Employees Employees performing office or non-manual work AND who are paid total annual compensation of $100,000 or more are exempt if they: Customarily and regularly perform at least one of the duties of an exempt executive, administrative or learned or creative professional employee identified in the standard tests for exemption.

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